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Govt clamps down on diversion of subsidised fertilisers
The department of fertilisers had set up ‘crack teams’ which had been monitoring the domestic movement of fertilisers for over a month after reports of large scale diversion of urea, a key crop nutrient which is globally in short supply.
The Union government has launched a sweeping crackdown on illegal diversion of subsidized fertilisers meant for farmers to industrial units, amid a global scarcity of crop nutrients, an official from the fertilisers ministry said on Tuesday.
In coordinated raids carried out by the Centre’s fertilisers department in the past one month, packaging units across six states were targeted, the official added.
The department of fertilisers had set up ‘crack teams’ which had been monitoring the domestic movement of fertilisers for over a month after reports of large scale diversion of urea, a key crop nutrient which is globally in short supply.
Last year, a global supply-chain squeeze and rising prices hit the availability of fertilizers in the country, as cultivators scrambled for crop nutrients in states such as Punjab, Haryana and Madhya Pradesh.
The crunch is expected to keep fertiliser prices elevated this year. India imports up to a third of its fertilizers to meet domestic demand and offers steep subsidies to compensate fertiliser companies who sell them at below-market rates to farmers. The department of fertilisers in coordination with revenue officials and police targeted 52 units across Haryana, Kerala, Rajasthan, Telangana, Gujarat and Uttar Pradesh. The units bought cheap urea stocks meant for farmers, repackaged them as industrial-grade urea and sold them as industrial raw materials at huge profits, defrauding the government.
Authorities also raided 38 units selling admixtures of subsidized fertilizers, meant for farmers, to industrial users at markets rates. The Centre has directed cancellation of “25 defrauding units, majority of which are located in Maharashtra, Gujarat, Tamil Nadu and Bihar”,the official citied above said.
India, the world’s largest buyer of urea and diammonium phosphate (DAP), has been hit by a sharp rise in global fertiliser prices due to supply disruptions, costlier raw materials, higher freight charges as well as lower global availability due to US sanctions on exporters Russia and Belarus.
Officials seized 25,000 bags (45kg each) cheap urea worth ₹7.5 crore. They also unearthed Goods and Services Tax (GST) evasion worth ₹63.43 crore networks in these illegal businesses. “Of this, ₹5.14 crore have been recovered,” the official cited above said. Six people were arrested and seven first information reports (FIRs) have been registered so far.
Apart from being a valuable crop nutrient, urea is also a raw material in multiple industries such as resin, plywood, crockery making and moulding-powder units.
India’s fertiliser subsidy is expected to rise by 55% to ₹2.5 lakh crore for the financial year FY23 on the back of an additional allocation of ₹61,000 crore last month for phospate-based fertilisers to help farmers.
On Monday, minister for chemicals and fertilisers Mansukh Mandaviya said India had secured sufficient fertilizer stocks to meet demand from millions of farmers ahead of the crucial kharif or summer-sown season. The government has secured long-term contracts to avoid scarcity caused by the global disruptions, he said.
Official data shows that imported urea prices have soared to $930 a tonne in April 2022 from $380 a tonne a year ago, which is a 145% increase. Rates of DAP and MoP (murate of potash) have risen to $924 and $590 a tonne in April 2022, up by 66% and 116% compared to a year ago.
